Ausralia: Winemaker Southcorp Ltd said it will release its Target's Statement to Foster's Group Ltd's hostile 3.1 bln A$ takeover offer on Thursday morning.
In a press advisory, the company said it will release the statement before the market opens on Thursday and hold a briefing later that day. The group is expected to outline its strategic and earnings outlook for both the year to June and the 2006 financial year in the statement as it seeks to fend off Foster's hostile bid.
Releasing its first half results last week, which showed a 49.7 pct improvement year-on-year to 60.6 mln aud, Southcorp said it sees a modest improvement in full year earnings. Foster's has bid 4.17 aud a share for Southcorp as it seeks to grow its wine business. Southcorp shares last traded at 4.35 aud.
Trevor O'Hoy can't see how anyone could afford to pay more than $3.1 billion for Southcorp. But, at tomorrow's market briefing, the winemaker will argue that the Foster's chief executive should be doing just that.
Southcorp's managing director John Ballard is not only expected to issue 2005-06 profit forecasts at the briefing but estimate what Southcorp would be worth in Mr O'Hoy's hands through a rare brand-by-brand valuation.
Southcorp's board has rejected Foster's $4.17 a share bid and hired consultant Bain & Co instead of an independent expert to help come up with an in-house valuation of the company behind the Penfolds and Rosemount labels.
The valuation is likely to be based on the synergies and savings Foster's could generate by combining Southcorp with its existing beer and wine business.
Mr Ballard has improved Southcorp fortunes after the costly Rosemount acquisition in 2001 and will paint a rosy picture of the winemaker's prospects in an improving global wine market.
But the Foster's camp argues its bid includes a premium for the "turn around" and savings generated by Southcorp's Project Veraison asset review.
Mr O'Hoy, who has played down the chance of a rival bid, claims the the savings the Melbourne group is likely to generate is already "hard baked" into the share price.
The Foster's chief also argues that the best guide for valuing Southcorp is the broker community whose average valuation is below $3 a share and the Oatley family which sold Foster's an 18.8 per cent stake at $4.17 a share.
"I've been through a negotiation on price and that was with the Oatley family. I feel completely wrung out from the process of them screwing $4.17 and guess what? They would have been shopping it to all the potential interlopers," he said.
Mr O'Hoy said that only he could offer $4.17 a share because Foster's "multi-beverage strategy" lends the marketing and distribution strength of the Carlton & United Beverages business to the group's wine labels.
"I can tell you we are very, very patient. This is the most robust Foster's has been for the past three to five years. We are not going to do anything stupid."
Southcorp is not expected to discuss at tomorrow's briefing the possibility of rival bidders. Southcorp closed 1c higher at $4.36.
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